While Toyota is in the automobile business, there are several aspects to this story that I want to address that go beyond the auto industry.
Lost Focus on Quality
The first aspect is at the root of Toyota’s quality and reliability issues. Toyota, a leader in quality for years, has taken a quality. Recalls, safety problems and law suits are the public symptoms of the problem. Toyota, which until recently was gaining market share, expanded too quickly. According to Automotive News, an auto industry trade magazine, Toyota’s market share in the U.S. rose to 17% in 2009 from just 9.3% in 2000. During that same time, Toyota moved up to number 2 in sales from number 4, just behind GM.
Volume and market share became so important for Toyota that quality suffered. Toyota also became a global manufacturer by locating assembly plants around the world. However, they have not been able to maintain quality production at these plants. Toyota became overextend, and their product suffered.
A Damaged Brand
Toyota had become a trusted brand based on quality and reliability. Automobile purchasers knew what to expect when they bought a Toyota. Over the years, Toyota has invested hundreds of millions in advertising and brand building. Toyota has successfully become one of the top brands in the world. Unfortunately, one of the most respected brands in the world has been tarnished. No brand that is bulletproof. The lesson here is that brands are valuable assets that must be managed and protected.
PR Mistakes
The last few weeks are a living case history in how not to handle a crisis. When managing a crisis, you need to get out in front of the problem quickly. Toyota has not managed the crisis, the crisis has managed Toyota. Toyota was slow to publically address the problems. Initially, there was no one from Toyota visible in the media. Essentially, Toyota lost control of the message and never got it back. Their lack of visibility allowed the media to control the message. The late attempt by the Toyota president Akio Toyoda was mediocre at best. They should have addressed the issue and taken responsibility.
Lack of Transparency
Congressional testimony and NTSB reports have revealed that Toyota knew of the issues months ago, but failed to address them publicly. Several media reports have cited an old Japanese proverb: "If it stinks, put a lid on it." It appears as if Toyota tried to follow this proverb and is now in a world of trouble.
Slow to Get a Message Out
Toyota was also slow to get their message out. Now, they are using television, radio and newspaper ad, as well as, social media. Unfortunately for Toyota every report of an unintended acceleration is now a national news story. Particularly in today’s media environment where responses are measured in minutes, the message needs to get out fast.
Toyota is still a great company, and they will survive this crisis. However, the damage has been done and the brand will forever be tarnished.
